Low-wage labor markets are traditionally viewed as competitive, and the possibility of strategic behavior by employers is dismissed. However, such behavior is not impossible. This paper investigates the possibility of tacit collusion by low-wage employers while setting wages. A game-theoretic explanation along the lines of the Folk theorem is offered, suggesting that a non-binding minimum wage may serve as a focal point for tacit collusion, proposing a symmetric solution to an infinitely played game of wage-setting. Several empirical techniques were employed in testing the hypothesis, including hurdle models of collusion. CPS monthly data is used for the years 1990-2005, covering the last four federal minimum wage increases. The likelihood of collusion at minimum wage is evaluated, as well as its dynamics during this period. The results generally support the collusion hypothesis and suggest that employers respond strategically to changes in minimum wage legislation while using the statutory minimum wage as a coordination tool in tacit collusion.Journal of Economic Literature Classification: J31, J38, J42, L10

Low-wage labor markets are traditionally viewed as competitive, and the possibility of strategic behavior by employers is dismissed. However, such behavior is not impossible. This paper investigates the possibility of tacit collusion by low-wage employers while setting wages. A game-theoretic explanation along the lines of the Folk theorem is offered, suggesting that a non-binding minimum wage may serve as a focal point for tacit collusion, proposing a symmetric solution to an infinitely played game of wage-setting. Several empirical techniques were employed in testing the hypothesis, including hurdle models of collusion. CPS monthly data is used for the years 1990-2005, covering the last four federal minimum wage increases. The likelihood of collusion at minimum wage is evaluated, as well as its dynamics during this period. The results generally support the collusion hypothesis and suggest that employers respond strategically to changes in minimum wage legislation while using the statutory minimum wage as a coordination tool in tacit collusion.Journal of Economic Literature Classification: J31, J38, J42, L10

PurposeThe motivation behind Section 953(b) of Dodd–Frank Act was the increasing pay inequality and supposed CEOs' rent extraction. It required public companies to disclose CEO-to-employee pay ratios. Using the ratios reported by S&P 1500 firms in 2017–18, this paper examines whether companies led by women and minority CEOs have lower ratios than those led by white male CEOs.Design/methodology/approachThis paper uses multivariate regression along with a matched sample analysis to examine whether female and minority CEOs have higher CEO-to-employee pay ratios compared to male and white CEOs, controlling for other determinants of pay ratios.FindingsResults indicate that CEO-to-employee pay ratios are 22–28% higher for female CEOs compared to their male counterparts, controlling for other determinants of pay ratios. There is, however, no statistically significant difference between the pay ratios of minority vs white male CEOs. Minority female CEOs have lower CEO-to-employee pay ratios than white female CEOs. Consistent with literature, larger and more profitable firms have higher CEO-to-employee pay ratios.Originality/valueWhile prior studies on determinants of CEO-to-employee pay ratios have used either industry-level or self-reported data for a small subset of firms (resulting in selection bias), this paper uses firm-level data that are available for all S&P 1500 firms due to new disclosure requirements due to the Dodd–Frank Act Section 953(b). Moreover, this is the first paper to test whether gender or ethnicity of a CEO affects within-firm pay inequality.

No abstract

Natalya Y. Shelkova – Ph.D., Associate Professor, Economics Department, Guilford College, Greensboro, USA. Email: shelkovany@guilford.edu It has been documented that the introduction of market economy institutions in Russia has disadvantaged Russian women, weakening their economic position and their power within the family. This paper investigates whether the introduction of the 2007 the Maternal Capital Law, which aims to promote fertility by granting Russian women a non-cash subsidy for having more than one child, affected the intrahousehold balance of power in Russian families. In order to investigate this hypothesis, the paper looks at changes in the ratio of family expenditure on children to spending on alcohol and tobacco before and after passing of the law. Data from the Russia Longitudinal Monitoring Survey (RLMS-HSE), 2002 to 2010, is used. The estimated regression models employ the difference-in-difference methodology and are based on Lundberg, Pollack and Wales, who researched a similar policy shift in the UK in 1970s. The results demonstrate that the year 2008 was a critical turning point: starting with 2008 the ratio of family expenditure on children to spending on alcohol and tobacco increased for families with two or more children (the results are statistically significant). After 2007, on average, expenditure on children increased by fifty-nine roubles per every ruble of alcohol and tobacco expenditures (mesearured in 2002 roubles), nearly doubling. The effect in families with a husband not holding a college degree was shown to be larger and more siginifcant than in families with college-educated husbands. It is concluded that the 2007 Law has had a positive impact on the bargaining power of Russian women.